Federal Reserve officials Beth Hammack and Jeffrey Schmid reiterated support for higher interest rates on Thursday, citing stubborn inflation pressures that remain above the central bank’s 2% target.
Hammack, president of the Federal Reserve Bank of Cleveland, stated that the case for tighter policy remains strong given persistent inflation. Speaking in a public address, she noted that the latest inflation reading aligned with expectations and did not indicate that current policy was restricting economic activity. Hammack, who voted in favor of the Fed’s late-July rate hike, emphasized that the neutral policy rate may be higher than some of her colleagues estimate. She also cautioned that prolonged inflation could erode public confidence in the Fed’s ability to restore price stability.
Earlier in the day, Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, told CNBC from the annual Jackson Hole research conference in Wyoming that current interest rates were not yet restrictive enough to slow the economy. He described inflation as "still stubborn and persistent," reinforcing the need for continued policy tightening to guide inflation back toward the 2% goal.
Both officials’ remarks follow the Fed’s late-July policy meeting, where Hammack supported the decision to raise rates. Their comments underscore ongoing divisions within the central bank over the appropriate pace and extent of further tightening, as policymakers assess incoming economic data and inflation trends.
